Section 10(10D) of Income Tax exempts any income received from an Insurance Policy from Income Tax. This benefits policies such as Endowment Plans, Whole-life Plans and Unit Linked Plans, all of whose returns and bonuses become tax-free.
Eligibility for 10(10D) exemption
Any amount you get from a life insurance product- be it ULIP, traditional policy or term plan does not form part of your income that is taxable.
However the following are not exempted under section 10(10D)
- Payout on annuity or pension plan
- Insurance policy for a disabled dependent
- Employer sponsored group life insurance scheme
- Any policy where premium in any year is more than 20% of the sum insured if it were bought after 1st
April 2003 but before 31st April 2012 or is more than 10% of the sum insured if it were bought after 1st April 2012
- Life insurance policy bought after 1st April 2013 for disabled or those suffering from ailments in section 80DDB if premiums are more than 15% of sum assured
The above conditions do not apply to death claims or any amount received on death of the insured person.